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Public Statements

The Fair Tax

Floor Speech

Location: Washington, DC


Mr. KING of Iowa. The folks that are buying food in McDonald's are going to pay the tax if we try to get it from McDonald's. So we know corporations don't pay taxes; they are aggregators of taxes that are paid by individuals, by consumers on the last stop. And so they're efficient aggregators of those taxes. They are actually the tax collectors on behalf of the Federal Government. The corporations that collect taxes don't pay them; they transfer it through them by the way they charge us for the $152 billion a year that it costs to comply with the Federal Tax Code.

And so I find it an act of frustration to seek to try to collect taxes from corporations when what I'm really doing is adding to the administrative costs for corporations so they add the taxes and the administrative costs on to the cost of the goods that have to be competitive in this marketplace, and that makes it that individuals pay taxes. But it also means that jobs go overseas because corporations that are taxed in America are at a disadvantage to the corporations that are overseas who aren't very good aggregators of America's tax dollars, and so they have to raise the taxes here more.

That's kind of the vision that I see that I would lay out here for the gentleman from Georgia. And we've got a long ways to go before America embraces the concept that I think will solve this problem.


Mr. KING of Iowa. Just to explore that a little further and that would be, looking at the corporate tax structure, there's corporate income tax, and then there are all of the wages that are paid out in payroll taxes to the employees. And of course one of the most regressive taxes we've is the payroll tax. And so one might argue that, well, those taxes are paid by the corporation, that half of the payroll, that .0765 that I have multiplied so many times with my employees that I've had over the decades. And of course that .0765 which is half of the 15.3 percent in payroll tax, half comes out of the employer, half comes out of the employee.

However, the half that comes out of the employer would be wages for the employee because it is a cost of doing business, it's a cost of competitiveness. And so when we add into the price of the goods and services provided by corporations, and I don't mean just corporations, they can be LLCs, they can be partnerships, sole proprietorships, you name it, a business entity that hires employees and/or provides goods and services for retail market or supplies to those who do, all of that structure of their taxes is built into the price.

And a fair amount of research brings us to a number that is generally considered to be about 22 percent of the retail price of goods and services sold in the United States as the tax component paid by the suppliers that get it into the marketplace and in the end paid by the consumer.

So those corporations that move overseas have a different tax structure, but those products that come in from overseas have a 28 percent marketing advantage over the products produced here in the United States because they don't have the burden of U.S. corporate taxes, and that includes the payroll taxes that are part of that taxing structure.

So I'd say that if we can remove the taxes from productivity in America, we end up with a 28 percent marketing advantage for U.S.-made products over those made in foreign countries.

And by the way, one more thing: I would not have picked up a nice Georgia company like Coca-Cola to use them as an example, but then that's just me.


Mr. KING of Iowa. If the gentleman would yield, I'd slip another anecdote into this that comes from just last weekend. I was over in eastern Iowa doing an event, and I happened to get reacquainted with a young gentleman by the name of Michael Dicks. Now, he is 13 years old; soon he'll be 14. But when he was 8 years old--I've told this story in the Congressional Record in the past--he saved up his money to go buy a little box of Skittles. So he had his change counted out just right in his pocket--89 cents for a box of Skittles--and had to reach up to the counter, I presume, and got his Skittles off the shelf and put them up on the counter. And he counted out his 89 cents and the checker rang it up and said, that will be 96 cents. And he said, but the price says 89 cents. And the checker said, but you have to pay the tax--that's the sales taxes in Iowa--so that's 96 cents, young man.

And he turned to his dad and he said, Dad, I have to pay taxes on Skittles? What a painful experience for an 8-year-old young man. But think of what that means if our taxes are transparent. That young man is going to grow up to be a conservative. He's going to put fewer demands on government. He's going to demand one thing--less taxes, less services. We're going to want to have more personal and individual responsibility, and we're going to let people provide for their own security in a lot of ways and achieve on their own. That is a cultural transformation that comes if you have a transparent tax and if you take the tax and stop punishing productivity and put it on consumption.


Mr. KING of Iowa. History is replete with the Founding Fathers, literary giants of the time, philosophers of the time, who looked at the Greek democracy and they were appalled at what it had produced. They produced for us a republic instead. But many of them spoke eloquently about what happens when the public would realize that a majority of them could vote themselves benefits from the public treasury. Some of them said democracy ceases to exist; some of them said that will destroy our republic. But I want to guess that most of the people that were providing the wisdom at the time commented on their fear that this country would move towards a majority voting themselves benefits from the public treasury.

So that is one of the reasons that we have a Republic instead of a democracy is because those of us who are elected as representatives of the citizens of the Republic are to have a higher responsibility than to listen to, let's say, people who want the fruits of someone else's labor and don't want to labor themselves.

And so we're at this situation now where, in the early part of this country, there was a policy that you had to be a land-owning male of age and other qualifications in order to vote because they wanted the public policy to be established by people that had skin in the game. And today we saw a constitutional amendment requiring a balanced budget fail here on the floor of the House of Representatives. I'd like to have seen a stronger one, but it failed here on the floor of the House. And that was a constitutional amendment with a cap at 18 percent of GDP and a supermajority to raise taxes.

Put some of that philosophy back in where it requires a supermajority to raise taxes, there is a restraint there that brings back some of that philosophy that helps offset the disadvantage that the working American has today who's paying those taxes. Your barber is at a disadvantage because some of the hair that he cuts is of people that aren't working. I'd say at least one out of every three heads of hair that your barber cuts is somebody that is in that role of 100 million Americans of working age who are not in the workforce, many of them are voting, they are voting themselves benefits from the public trough.

And I'd suggest that we take the tax off of productivity in America, stop punishing production, put it over on consumption. And I'm just looking around for a bill number that I could attach myself to because I'm drawing a blank.


Mr. KING of Iowa. And I appreciate the opportunity to be your partner in this.

And I would say to the folks on either side of the argument that disagree, they're both wrong, whether they're from the left or from the right. And the bottom line is this: the Fair Tax does everything good that anybody's tax proposal does that is good; it does them all and it does them all better. And I'm happy to take that debate anywhere in this land and have folks that will try that on and we'll finish second in that debate.

I quickly yield back because the gavel is in the air.


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